4A - Economic Development (part 2)

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1 • Access to capital. As this plan is being compiled, the United States is in a severe economic recession 2 brought about,at least partially, by poor lending practices. Even with historically low interest rates,banks 3 are having a difficult time lending, especially to businesses that may present a degree of risk. While 4 greater levels of caution amongst lenders may be the norm for the foreseeable future, it is not clear that 5 interest rates can remain at their current record lows. 6 • Population migration. The current economic downtown has manifested itself most clearly in the 7 mortgage market,where home prices have fallen and, due to stricter lending requirements,fewer people 8 are in the market to purchase homes. National reports indicate that one in four mortgage holders owe 9 more than their home is worth, which inevitably stifles the ability for people to sell their homes and 10 move. For an area like Pequot Lakes that has been reliant on growth from in-migration, this presents a 11 changed reality. 12 • Aging infrastructure. A tremendous amount of infrastructure has been put into the ground to 13 accommodate and, to some extent, induce growth. Whether or not the resulting tax base justifies the 14 investment,the infrastructure deteriorates and will someday require substantial,expensive maintenance. 15 In the current (and future) economy, it will be necessary to make the highest use of each infrastructure 16 investment the city chooses to maintain. 17 • Aging population. Elderly households typically have incomes that are more stable and fluctuate less with 18 market conditions, good or bad. A Pequot Lakes population that is slightly older than the state average 19 (which itself is considered disproportionately aging) indicates some built in resistance to policies that 20 involve risk or the potential for tax rate fluctuations. 21 • Less government support. State and federal governments are realizing the same kind of fiscal limitations 22 as local governments and are questioning priorities for future spending. Local government aid has been 23 cut dramatically and future cuts are almost assured. With populations nationwide shifting from rural to 24 urban/suburban areas, policymakers are questioning the wisdom of future infrastructure investments in 25 less populated areas.While there will likely be some money available from state and federal sources,the 26 City of Pequot Lakes needs to prepare for the day when their support is negligible. 27 • More connected world. From the Internet to cellular phones,our ability to communicate with each other 28 has vastly expanded. Where Pequot Lakes was once remote and isolated, it is now connected to 29 international commerce in ways previously unimaginable.This leveling of the competitive landscape does 30 not give Pequot Lakes an advantage,but does present a new opportunity that can be capitalized on. 31 • Increased technology advancements. Along with improvements in communication, other technological 32 advancements continue benefit Pequot Lakes businesses. The ability to attract and retain an educated 33 workforce,the ability to collaborate with partners across the globe and the options for researching new, 34 innovative approaches are all enhanced by continued improvements in technology.It is clear that the next 35 era,however it manifests itself,will be lead by those able to best utilize new advancements in technology. 36 It is likely that the future of Pequot Lakes will be oriented towards tourism,tourism support industries, businesses 37 that sell goods and services to the local market and businesses that utilize technology to create and/or distribute 38 goods and services beyond the area. Notably absent from this list are the industries of growth (land development, 39 real estate,title closing,surveying and engineering, etc..)which,while import to a functioning local economy, are 40 unlikely to be the dominant industries they were over the past two decades. 41 42 OPPORTUNITIES AND CHALLENGES 111 Page